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by martinko 2053 days ago
Smart contracts have a major hurdle called the 'Oracle problem'. In summary, it is hard to get data from the real world into the blockchain. Even if you put it there, why should anyone trust you. A way around this is to get many credible parties to input the 'state' from their perspective and then blend the inputs. Once you have a data stream that you can trust (relatively) on the blockchain, you can make non-custodial trustless (or trust-minimized) smart contracts (bets, predictions, derivatives, etc.) based on the original variable in the real world.
1 comments
mike_d 2053 days ago
> bets, predictions, derivatives, etc.

All things that work just fine without the blockchain.

Blockchains only solve one problem: when two or more parties don't trust each other, and do not have the protections of the legal system (trying to be anonymous or conducting illegal acts). They will forever remain a solution in search of a problem.

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blueblisters 2053 days ago
Smart contracts do solve one additional problem: for contracts where performance is measured on purely objective, measurable criteria, execution is swift - there is no scope of disputes hence legal costs are reduced. You also don't need a 3rd party to oversee the execution of contracts, reducing management/transaction costs.
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zaarn 2053 days ago
where performance is objectively measurable on the blockchain, if it's in the real world, you introduce trust issues again. How could one trust the measurement was objective in the real world?
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blueblisters 2052 days ago
Yes, definitely in the current format, smart contracts don't obviate trust issues. It is proposed that a 3rd party oracle will be used to verify the criteria is met for execution. Oracles can be incentivized to build credibility.

For example, in the case of insurance contracts, the oracle can be sensors on the car which can make decisions about who's at-fault and accurately assess damage.

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zaarn 2052 days ago
How do you trust the sensors are delivering good data to the oracle?
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skellystudios 2053 days ago
There are plenty of countries where protections of the legal system isn't guaranteed, even if you're not trying to be anonymous or conduct illegal acts.
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